Bridging sector lends more than Hammond’s Home Building Fund pledge – West One

The bridging sector believes it is already doing much of the work chancellor Philip Hammond’s Budget set out, but believes the moves should boost the sector.

West One Loans managing director Stephen Wasserman (pictured) told Specialist Lending Solutions that the £1.5bn additional Home Building Fund (HBF) cash would be welcomed by SMEs, many of whom would be looking to capitalise on investment opportunities.

With property projects now accounting for around 85% of total lending in the bridging market, the sector has witnessed a five-fold growth in lending since 2011.

“That means the private sector is already lending well in excess of the pledged HBF cash to property professionals, many of whom are using these funds for developing housing,” said Wasserman.

“Whether choosing to renovate or build from scratch, it is important investors are aware of the range of specialist financing options open to them, particularly while in this uncertain climate as Brexit negotiations progress. Bridging tends to be a good fit for this environment, due to the fast, flexible nature of the loans as well as the complementary way that bridging can work in tandem with full-blown development finance.

“For this reason, we’re optimistic that the growth in specialist lending will continue in the months to come, particularly as the government pledges to help SME developers in the housebuilding market with loan guarantees as well as the HBF,” he added.

Buying with bridging

There was also recognition the Association of Short Term Lenders (ASTL), trade body that people were increasingly using bridging deals to fund property purchases.

ASTL CEO Benson Hersch noted that this could prove particularly useful given the desire to boost home buying.

“For many, a house to call their own remains out of reach as the deposits required are still too high,” he said.

“Recent analysis undertaken by the ASTL of our membership shows that bridging loans are increasingly popular forms of finance for people looking to purchase their own homes. Such a trend demonstrates how alternative forms of finance are increasingly providing the solutions where government should be and could be bridging the gap.”

Hersch added that without a significant increase in social housing, Hammond’s aim to build 300,000 homes a year was a pipe dream, “especially as current figures include permitted development (for example offices to flats) rather than ground up building”.

Competition driven down prices

Brightstar director of short term lending and development finance Kit Thompson echoed much of these thoughts, adding: “It is not just about building new housing, but providing affordable housing that is accessible for the many, not just the few.

“The short-term sector will continue to provide vital liquidity to property professionals and house-builders alike, which are still suffering from a lack of appetite and funding from the traditional high street banks.

“Thankfully the bridging and development lenders are open for business and competition has driven down pricing as well.”

Owain Thomas is Features and Contributing Editor at Mortgage Solutions. He has previously covered the protection and mortgage industry, more recently he edited Workplace Savings and Benefits, and HRD Connect.
Owain won the Financial Healthcare Journalist of the Year (B2B) at the Headline Money Awards in 2014 and 2016. He also won the Protection Review's Journalist of the Year award in 2012.

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